12 October 2018

Zimbabwe: TBs Used to Rob Nation - Chamisa

MDC President Nelson Chamisa says parliament should probe government's use of treasury bills (TBs) arguing they were used to rob the nation.

In an interview with the Zimbabwe Independent, Chamisa said parliament should set up a commission of enquiry in the TBs usage.

He also pointed out that the recent 2% tax on electronic transactions was criminal and should be done away with.

Government has since 2013 relied on TBs to finance an unsustainable budget deficit.

The stock of TBs issued by government, which has increased to US$7,6 billion by end of August from US$2,1 billion in 2016, is however crowding out the private sector from borrowing for productive purposes while increasing monetary supply, hence fuelling inflationary pressures in the economy.

The TBs are also draining hard currency and destabilising the financial system.

On average, government has issued TB debt securities worth US$275 million every month over the last two years to finance a widening budget deficit estimated at US$1,3 billion.

This represents a 261,9% jump in the issuance of the promissory note, amid mounting budgetary pressures emanating from government's appetite to spend money it does not have.

"There is a Treasury Bills scandal and parliament should investigate. Parliament should form a commission of inquiry into who benefited from the TBs," Chamisa said.

TBs are short-term debt obligations backed by the government with a maturity of less than one year.

"Why should we have a budget that we cannot adhere to? This expenditure was done within the shortest possible time.

This government cannot manage its expenditures. It is theft," Chamisa said .

Zimbabwe, currently barred from accessing fresh lines of credit from international financial institutions after failing to settle a huge external debt stock estimated at US$7,4 billion and arrears, has resorted to issuing TBs to finance various budgetary priorities and profligacies.

Statutory paper issued by government soared from US$4,417 billion in 2017 to nearly US$8 billion this year, as government borrowed heavily on the domestic market to finance a widening budget deficit, a situation which investment analysts say has crowded out the private sector from accessing lines of credit locally.

Although government has not defaulted on honouring the statutory paper upon maturity, investment analysts contend that government's excessive borrowing on the domestic market had the effect of crowding out the private sector which is in dire need of fresh lines of capital required for retooling and revitalising operations.

Chamisa said government was stealing from its citizens through the excessive issuance of TBs and the burgeoning of RTGS balances that are not backed by real cash.

"There is policy inconsistency, deception and cheating of the citizens. Government must build trust because the crisis in this country is a confidence deficiency. But you can't build confidence when you are running a casino economy," Chamisa said.

He also castigated government for last week's Monetary Policy which he described as retrogressive.

"The monetary policy enunciated by the RBZ and the mid fiscal review by Finance minister Mthuli Ncube indicated a palpable presence of corruption and impoverishing of the people," Chamisa said.

On the 2% tax for every US$1 electronic transaction, he said: "It is criminal to tax Zimbabweans who are already the most taxed in Africa. The introduction of the tax is cruel and it is meant to hit the pocket and weaken business. They are undermining the financial inclusion."

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